Correlation Between Mechanics Bank and Bantek
Can any of the company-specific risk be diversified away by investing in both Mechanics Bank and Bantek at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Mechanics Bank and Bantek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mechanics Bank and Bantek Inc, you can compare the effects of market volatilities on Mechanics Bank and Bantek and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Mechanics Bank with a short position of Bantek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mechanics Bank and Bantek.
Diversification Opportunities for Mechanics Bank and Bantek
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mechanics and Bantek is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Mechanics Bank and Bantek Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bantek Inc and Mechanics Bank is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Mechanics Bank are associated (or correlated) with Bantek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bantek Inc has no effect on the direction of Mechanics Bank i.e., Mechanics Bank and Bantek go up and down completely randomly.
Pair Corralation between Mechanics Bank and Bantek
Given the investment horizon of 90 days Mechanics Bank is expected to generate 53.43 times less return on investment than Bantek. But when comparing it to its historical volatility, Mechanics Bank is 12.65 times less risky than Bantek. It trades about 0.02 of its potential returns per unit of risk. Bantek Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Bantek Inc on September 2, 2024 and sell it today you would lose (9.77) from holding Bantek Inc or give up 97.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 58.67% |
| Values | Daily Returns |
Mechanics Bank vs. Bantek Inc
Performance |
| Timeline |
| Mechanics Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Bantek Inc |
Mechanics Bank and Bantek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mechanics Bank and Bantek
The main advantage of trading using opposite Mechanics Bank and Bantek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mechanics Bank position performs unexpectedly, Bantek can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bantek will offset losses from the drop in Bantek's long position.| Mechanics Bank vs. Merchants Marine Bancorp | Mechanics Bank vs. MNB Holdings Corp | Mechanics Bank vs. Oconee Financial | Mechanics Bank vs. Harbor Bankshares |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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